FormerXBC Inc XEBEQ

Canaccord upgrade

[Dunworkin2]

Canaccord Genuity’s Yuri Lynk raised his target for Xebec Adsorption Inc. (XBC-T) to $2.50 from $2.25, reiterating a “hold” recommendation. The average is $3.06.

“We believe Xebec is well positioned to benefit from the increased demand for renewable gases that we see evolving from the energy transition,” he said. “This growth potential was evident in management’s strategic three-year plan released last month. Nonetheless, we remain on the sidelines as we await signs of improved execution, especially with input cost inflation and logistical issues likely to weigh on Q1/2022. Currently, Xebec trades at 2.1 times EV/Sales (2022E) versus industrial gas peers at 2.5 times. We set our target using 1.8 times EV/Sales (2023E) down from 2.0 times previously. The reduction in our target multiple reflects our concern Xebec may struggle to profitably replace this carbon capture order when it rolls off next year and the execution risk associated with such a large contract.”